Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

In an interview for the economics club of a school, the interviewer asked, "In case of low quality food items like coarse grains, when the income of consumer rises, what will happen to its demand?

Options:

The demand increases

The demand decrease

The demand remains same

None of above

Correct Answer:

The demand decrease

Explanation:

As the income of the consumer increases, the demand for an inferior good falls, and as the income decreases, the demand for an inferior good rises. Examples of inferior goods include low quality food items like coarse cereals. This happens because every individual eventually wants a better standard of living for himself and his family. Thus, with an increase in income he switches to a product which is of better quality.